Biological membranes form the barrier that controls which substances are allowed to pass in and out of the cell and also defines the boundary of most intracellular organelles. Phospholipid molecules composing membranes of cells are free to diffuse rapidly within one leaflet of the bilayer structure but face a substantial barrier to translocation, or flip-flop, from one side of the membrane to the other. However, membranes contain enzymes called flippases and floppases that translocate phospholipid across the bilayer and appear responsible for the asymmetric distribution of different phospholipids between the leaflets. The medical significance of an asymmetric plasma membrane is best understood in blood cells where regulated exposure of phosphatidylserine (PS) in the extracellular leaflet induces blood clotting. Dying cells also expose PS in the extracellular leaflet facilitating their recognition and phagocytosis by other cells. In addition, some floppases are capable of pumping anti-cancer and antimicrobial drugs out of cells. Overexpression of these enzymes lead to multi-drug resistant tumors and pathogens, a major health concern throughout the world. The identities of enzymes catalyzing flip-flop are poorly characterized with the best candidates being P-type ATPases in the Drs2/ATPase II subfamily for the flippases and ABC transporters for the floppases. Characterization of the yeast members of the Drs2/ATPase II subfamily (Drs2p, Neo1p, Dnf1p, Dnf2p and Dnf3p) allowed application of powerful genetic tools to dissect the biochemical and cell biological functions of these potential flippases. Surprisingly, these ATPases are intimately linked to vesicle-mediated protein transport in the secretory and endocytic pathways. For example, Drs2p is required for a flippase activity in late Golgi membranes and for the formation of a specific class of exocytic transport vesicles that bud from this organelle. Formation of these vesicles also requires a small GTP-binding protein called ARF and the clathrin coat protein. The long-term goal of this research is to define the molecular mechanism of flippase function in vesicle-mediated protein transport. The proposed studies will further define the flippase activity of Drs2p and its role in forming clathrin-coated vesicles from the Golgi complex. These studies will also define a floppase activity discovered in late Golgi membranes and determine if the floppase antagonizes Drs2p function in vesicle formation.